Lowering IT Costs with Modernization
Kim Trantham
Director
Oracle Modernization Project Advisement
May 1, 2009 Copyright Oracle Corporation 1
Today’s IT & Business Challenges
Colliding pressures
Reduce IT Costs
Reduce Complexity
Reduce Risk
Increase Rate of Change
Manage More Information
Improve Quality of Service
May 1, 2009 Copyright Oracle Corporation 2
Change is Constant & Unrelenting
“Globalization. Instant “In order to achieve high
Communications. Virtual business performance, businesses will
networks. Empowered customers. need to continually refine
market focus and position, and
These are a few of the dizzying develop distinctive capabilities
changes forcing companies to that can adapt to shifting
reinvent how they do business. sources of competitive
advantage, as well as harness
innovation to create new
One thing is certain: Change is no markets.”
longer something that happens
periodically. It’s continuous,
constant and unrelenting.”
Change Happens!
May 1, 2009 Copyright Oracle Corporation 3
What is IT Modernization?
IT Modernization is the evolution of a business and its
business processes. Goals include increasing revenue,
improving agility, lowering risk and reducing costs by evolving
to more modern IT environments while preserving business
content and rules.
IT Modernization represents a complete overhaul of the culture of IT. IT
organizations are now faced with generational shifts in technology,
business pressures and IT skills, and must close the gap between
yesterday’s IT implementations and tomorrow’s IT demands.
May 1, 2009 Copyright Oracle Corporation 4
Modernization is more than lowering costs!
What is the business value that you will derive?
Will costs be reduced?
Will you see better business efficiency?
Will your business become more agile?
Will you have better visibility into your business?
Will this grow your revenue?
Will the IT staff be more productive?
What is the ROI? The TCO?
Change without innovation is not Modernization.
May 1, 2009 Copyright Oracle Corporation 5
Modernization Payback
80
70 Stay on
mainframe
legacy
60
50 Modernize
Re-host to lower
cost platform Cumulative
40 Savings
30
20
Break-Even
10 Point
Project Investment
0
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
May 1, 2009 Copyright Oracle Corporation 6
Challenges with Legacy Software
Top Secret
Product Sunsets
ADSO APPC TCP
Natural RACF
LU6.2
4GLs
z/OS
Adabas
30+ Years
30+ Years
COBOL Increasing Costs
Aging Resources Data Isolation and
IMS
IMS
LE
LE & IMS/DB
PL/I Redundancy
DB2
Business Risks
CICS
Assembler
ISAM/VSAM
ISPF
CA/7 JES
3270
Inflexible
OPC
Systems
May 1, 2009 Copyright Oracle Corporation 7
Is This Your Data Center?
Legacy
Applications Data
eMail Mart • Multiple vendors products
Data
Mart
• Lots of processor power
ERP
• Separate storage silos
HR
Data
• Different operating systems
Warehouse CRM
Data
Mart
May 1, 2009 Copyright Oracle Corporation 8
Is This Your Software Portfolio?
Availability
Availability Manageability
Manageability
Storage Management Security
May 1, 2009 Copyright Oracle Corporation 9
Oracle Modernization
Open Architecture on Open Systems with Open Standards:
Complete – Open – Integrated
… and the Means to Get There
Top Secret
ADSO
Natural Z/OS
RACF
CSP
DB2
PL/I IMS/DB
COBOL ISAM/VSAM
ISPF
Assembler
“C”
OPC 3270
T
C
Sybase JES P
CA/7
Informix
APPC LU6.2
Provides a Target Architecture
Oracle’s Application Integration Architecture
Oracle’s Maximum Availability Architecture
May 1, 2009 Copyright Oracle Corporation 10
For Many, These Transformations Resemble
“Science Projects”
Division 1 Division 2
Sales Operations Accounting Sales Operations Accounting
CRM Mfg CRM Mfg
Partner
System
Order Order
Financials Financials
Mgmt Mgmt
May 1, 2009 Copyright Oracle Corporation 11
Legacy Realities and Consequences
Intense Pressure to Legacy Skills are
Minimize IT Costs and 2/3rd Diminishing
Increase Agility of Business-
• Loss of business
• Maintenance for 1000 MIPS Critical process knowledge as
legacy environment runs Applications are people retire
$3M-$5M/yr on Legacy • Increased risk to
Platforms supporting, enhancing
• Lock-in and high cost
limits funds for new core applications
initiatives • IT cannot react quickly
• High integration cost and to emerging business
time-to-market delays requirements
impact front-end agility “Gartner predicts1, by 2008,
organizations that have not
developed a legacy
modernization strategy risk losing
60-80% the opportunity to leverage this 35M LOC
portfolio due to a decline in skills Maintained in
of IT Budget Legacy Apps at an
Consumed by and knowledge of these systems Average Fortune
Maintenance Cost (0.7 probability).” 100 Company
(Apps and
Systems)
1Dale Vecchio, Gartner, “Leverage Your Mainframe Applications With SOA,” 25 October 2005.
May 1, 2009 Copyright Oracle Corporation 12
Legacy Software Hinders Performance
• Dramatically slows speed of business
Must be an agile business to:
Thrive, beat their competitors and succeed
Address globalization and emerging markets
• Huge organizational risks
Critical legacy skills rapidly disappearing due to aging workforce
Legacy Application & Infrastructure
Proprietary infrastructure – prevents taking advantage of open systems
Governance, Risk & Compliance – hindered by fractured/isolated systems
Software & Hardware
Unsupported products and technologies
• Escalating That
costs no longer meets business needs
Locked into legacy software on proprietary O/S and expensive hardware
Massive operational costs
Application maintenance costs are a drain on your business and IT resources
Rare legacy skills are expensive
White Paper
“Why Modernize?” at
www.oracle.com/goto/modernization
May 1, 2009 Copyright Oracle Corporation 13
Oracle Modernization
Solid foundation to grow your business
• Proven business value
Increase business agility & capability
Preserve your investment while reducing risk
Improved compliance
Increase ROI while reducing TCO
• Proven business solutions
Complete, Open & Integrated
• Proven methodology (business & technical)
Incremental phased projects driving value over multiple years
• Proven partners
System Integrators
Specialty modernization vendors
May 1, 2009 Copyright Oracle Corporation 14
Demonstrated Customer Success
Spanning all industries…
May 1, 2009 Copyright Oracle Corporation 15
Multiple Modernization Approaches
COTS Replacement
custom apps with COTS: Oracle Apps for
custom apps with COTS: Oracle Apps for
HRMS, CRM, Financials, Procurement
HRMS, CRM, Financials, Procurement
Re-Architect SOA
By uncovering business rules,
By uncovering business rules, Oracle Integration
mining models and forward-
mining models and forward-
engineering to re-useable
engineering to re-useable Modernization Leave applications on MF,
Leave applications on MF,
services, BPM flows, and
services, BPM flows, and extend in place via adapters,
extend in place via adapters,
Business Rules.
Business Rules. WS, etc.
WS, etc.
Re-Host Automatic
Migrate to open systems with
Migrate to open systems with Migration
automated process,
automated process,
preserving code and data, Convert 4GLs to COBOL or
Convert 4GLs to COBOL or
preserving code and data,
SOA enable and integrate Java, PL/I to C/C++, etc.
Java, PL/I to C/C++, etc.
SOA enable and integrate
Mix multiple approaches based on your modernization goals
May 1, 2009 Copyright Oracle Corporation 16
COTS
(Commercial-off-the-shelf)
Replacement
HR
Financials
Consulting
CRM
Legacy
Databases
May 1, 2009 Copyright Oracle Corporation 17
Differentiator: Most Complete, Integrated Stack
Benefits
• Best of Breed for each component
• Integrated management
• Integrated functionality
Applications • Integrated troubleshooting & support
Fusion
Applications • Performance Optimization
• Interoperability testing
Development
Tools Oracle Tools / J2EE
• Standards based
• One Stop Support
Middleware Fusion
Suite Middleware
Examples
Database 10g,
• Integrated Security Model
Database TimesTen IMDB, • Synchronized organizational structure
Berkeley DB
across all applications
Operating • Embedded analytics
Linux
System
Open Standards
Expansion Through Acquisitions
APPLICATIONS TECHNOLOGY
Enterprise Enterprise
Deals Deals
Manufacturing Performance
Industries Management
Retail
Industry Identity
Management
Comms
Industry
Content
Management
Banking
Industry
Middleware
Management
Utilities
Industry
Database
Insurance
Industry
(pending)
Systems
Others Management
May 1, 2009 Copyright Oracle Corporation 19
Case Study – Large Worldwide Retailer
Legacy Target Facts
• PowerBuilder and • Oracle Retail • Provided additional
homegrown functionality
• Oracle Database
applications handling
• Improved business
merchandizing
processes
• DB/2 back end
• Improved market
• Needed to take positioning as or more
application to next important than cost
level savings
• Many applications • Many to 1 application
across many countries
May 1, 2009 Copyright Oracle Corporation 20
Where is the business value?
Will costs be reduced? Yes
Will you see better business Yes
efficiency?
Will your business become Yes
more agile?
Will you have better visibility Yes
into your business?
Will this grow your revenue? Yes
Will the IT staff be more Yes
productive?
May 1, 2009 Copyright Oracle Corporation 21
SOA Integration
Batch
Oracle BPEL
3270 Access
Portal
COBOL
Oracle BI
DB2 ISAM/VSAM
May 1, 2009 Copyright Oracle Corporation 22
Case Study – Large Insurance Company
Legacy Target Facts
• IBM Mainframe • Leave applications on • 3 – 4 week
running the business the mainframe maintenance cycles
• 3 – 4 month • Self developed • Less regression
maintenance cycles infrastructure based testing
on standards
• Replacing all cost • Opened door for other
prohibitive use of SOA services
• Further modernization
- one service at a time
May 1, 2009 Copyright Oracle Corporation 23
Where is the business value?
Will costs be reduced? Yes
Will you see better business Yes
efficiency?
Will your business become Yes
more agile?
Will you have better visibility Maybe
into your business?
Will this grow your revenue? Hopefully
Will the IT staff be more Yes
productive?
May 1, 2009 Copyright Oracle Corporation 24
Re- Architecting
Oracle BPEL
Batch
Recover Architect
Artifacts
3270 WebCenter ADF
Oracle AS10g
4GLs Data MIgration
3GL Tuxedo
SI Partners
Data Oracle 10gDB
May 1, 2009 Copyright Oracle Corporation 25
Case Study – Government
Legacy Target Facts
• Vital Stats and Motor • Oracle AppServer • 18 month implementation
Vehicles
• Oracle 10g • 2/3 of reports eliminated
• 15+ year old
• Cognos BI • Maximum use of SOA
NATURAL/ADABAS
• Novell eDirectory • Maximum use or new
• 2.5M lines of code
architecture
• 700K lines of Java/XML
• Needed new functionality
• Batch almost eliminated
• Reduced costs from
$330K per month to
$50K per month
• Same external interfaces
May 1, 2009 Copyright Oracle Corporation 26
Where is the business value?
Will costs be reduced? Yes
Will you see better business Yes
efficiency?
Will your business become Yes
more agile?
Will you have better visibility Yes
into your business?
Will this grow your revenue? Yes
Will the IT staff be more Yes
productive?
May 1, 2009 Copyright Oracle Corporation 27
Automated
Natural/Adabas Migration
SI
Oracle WebCenter
PowerBuilder
Oracle 10gAS Oracle Tuxedo
Translate
COBOL
Fortran
“C”
Partners
Oracle 10g DB
May 1, 2009 Copyright Oracle Corporation 28
Case Study – Government
Legacy Target Facts
• Economic and • J2EE • 50% Operational Cost
Business Affairs Dept. Savings
• Oracle DB
• Business Registration • Database Consolidation
• Linux
• 2,700 NATURAL/ • Easier web access
• Web Based
ADABAS programs
• No reliance on
NATURAL/ADABAS
skill sets
May 1, 2009 Copyright Oracle Corporation 29
Where is the business value?
Will costs be reduced? Yes
Will you see better business Yes
efficiency?
Will your business become Somewhat
more agile?
Will you have better visibility Hopefully
into your business?
Will this grow your revenue? Yes
Will the IT staff be more Yes
productive?
May 1, 2009 Copyright Oracle Corporation 30
Re-Hosting
SameSI
Environment
Batch
ISAM/VSAM
COBOL
3270
JES
3270
COBOL SI Partners
Oracle Tuxedo
DB2 ISAM/VSAM Oracle RAC
May 1, 2009 Copyright Oracle Corporation 31
Case Study – Large Assurance Company
Legacy Target Facts
• 50M members/80,000 end • Automated re-host of all • Phased migration and
users business logic and data data center consolidation
• 12,000 MIPS IBM and Bull • Oracle Database • $55M savings in one
mainframe environment year after migration
• Oracle Tuxedo
• COBOL/CICS/DB2 on IBM; • 1 year ROI
• Oracle Portal
COBOL/TP8/UFAS on Bull
• Processing time reduced
• 3,500 COBOL programs, by 8 hrs/day
4,600 JCL jobs
• Zero down time, no
270 Tb of data
missed payments
• IT ready for further
component-based
modernization
May 1, 2009 Copyright Oracle Corporation 32
Where is the business value?
Will costs be reduced? Yes
Will you see better business Expect to be the same
efficiency?
Will your business become Expect to be the same
more agile?
Will you have better visibility No, visibility is the same
into your business?
Will this grow your revenue? Potentially through self-funding
projects
Will the IT staff be more Maybe
productive?
May 1, 2009 Copyright Oracle Corporation 33
Oracle Modernization Approaches
1. Replace with COTS
• Purchase a packaged application to replace legacy
Cost effective and adopts new technology such as SOA
2. SOA Wrapping
• Leave Legacy and wrap with SOA Interfaces
Fast and easy to start – but still have legacy
3. Re-Architecting
• Recover content and leave legacy technology behind
Maximizes cost reduction, agility and use of SOA
4. Automated Migration
• Transform legacy artifacts automatically
Gets to new environment – but leaves legacy trail
5. Re-Hosting
• Move “as-is” to another platform
Saves operating cost – but still have legacy
May 1, 2009 Copyright Oracle Corporation 34
Start with Oracle!
1. Identify your immediate business needs
Specific technology you need to eliminate
Specific short term need due to lease expiration
Immediate business need
2. Formulate your modernization strategy/roadmap
Understand your business drivers
Evaluate your needs
Determine target architecture
Examine which Modernization approaches work for you
Develop the business case for your next step
Review potential partners
3. Ensure your success
Develop and implement an execution plan
May 1, 2009 Copyright Oracle Corporation 35
Oracle Modernization Sales
Region Sales Rep Phone Email
Worldwide & LAD Joe Noonan +1 704.904.7666 joe.noonan@oracle.com
NAS Nic de Beco +1 781.354.0468 nicolas.de.beco@oracle.com
EMEA Kenny Blair +44 7590187025 kenneth.blair@oracle.com
APAC (China, Korea) Ivan Kladnig +61 2 9491 1657 ivan.kladnig@oracle.com
APAC (ANZ, ASEAN) Peter Zalums +61 404 012 055 peter.zalums@oracle.com
Japan Masahide Nawata +81.3.6238.8324 masahide.nawata@oracle.com
May 1, 2009 Copyright Oracle Corporation 36
Q&A
May 1, 2009 Copyright Oracle Corporation 37